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StoneCo (STNE) to Report Q4 Earnings: What's in the Cards?

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StoneCo Ltd. (STNE - Free Report) is set to release fourth-quarter 2019 results on Mar 2.

The Zacks Consensus Estimate for fourth-quarter earnings stayed at 22 cents over the past 30 days, implying growth of 29.4% from the year-ago reported figure.

Moreover, the consensus mark for revenues is pegged at $150.4 million, indicating growth of 8.1% from the number reported a year ago.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing in one, the average positive surprise being 10.9%.

StoneCo Ltd. Price and EPS Surprise

StoneCo Ltd. Price and EPS Surprise

StoneCo Ltd. price-eps-surprise | StoneCo Ltd. Quote


Let’s see how things are shaping up for this announcement.

Factors to Watch

StoneCo’s addition of features and capabilities to its platform to help clients better manage business has been aiding its client base expansion and improving loyalty, a trend that most likely continued in the fourth quarter as well. The company’s strengthening footprint among small-and-medium sized (SMB) businesses is expected to have widened user base in the to-be-reported quarter

Reflective of this, third-quarter 2019 total active clients jumped 82.8% year over year to 428.9K. Net client addition also surged 101.7% to 68.7K, driven by solid SMB client addition.

StoneCo’s software client base is expected to have been boosted by increased cross-selling opportunities. Further, inclusion of new solutions in the areas of banking and credit is expected to have been well received.

Notably, StoneCo hit 29K banking accounts at the end of the third quarter, courtesy of marketing campaign and the launch of prepaid card in addition to the digital accounts.

Moreover, the number of subscribed clients in software increased from 70K in July to more than 100K at third-quarter end. The fourth-quarter revenue results are expected to reflect the same.

What Our Model Says

According to the Zacks model, a company with a positive Earnings ESP along with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates. But that’s not the case here.

StoneCo has a Zacks Rank #2 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With Favorable Combination

Here are some other stocks worth considering as our model shows these too have the right combination of elements to beat on earnings.

Guidewire Software (GWRE - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marvell Technology (MRVL - Free Report) has an Earnings ESP of +5.70% and a Zacks Rank of 3.

CrowdStrike (CRWD - Free Report) has an Earnings ESP of +5.26% and is Zacks #3 Ranked.

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